Mark Carney’s claim that EU membership has made the UK economy more dynamic – the evidence he ignored

David Green, 10 March 2016

In his letter to the Chairman of the Treasury Committee, dated 7 March 2016, Mark Carney said: ‘to the extent it increases economic and financial openness, EU membership reinforces the dynamism of the UK economy’.

He has been accused of making a politically controversial assertion because his claim was not consistent with the EU’s own long-standing evidence. A report for the European Commission drew very different conclusions from those of Mr Carney. It was published as long ago as 2007, which has given Mr Carney plenty of time to study it.

Here are some excerpts from the European Commission report Steps towards a deeper economic integration: the Internal Market in the 21st century:

‘Not only are EU firms less active in fast growing markets but also they have not managed to improve their performance in fast growing sectors at world level although this was one of the main goals of the 1992 Single Market programme.’

‘…the Internal Market… has not led to a sufficient shift of the specialisation of the production sector towards the more technology intensive sectors where EU competitiveness can be more sustainable in the long-run.’

‘…the innovative performance of the EU as a whole and of most EU countries lags significantly behind that of top performers such as the US and Japan…’

‘What is more worrying is the widening gap between the laggards and frontrunners and between the EU and other developed economies.’

‘The internal market two-fold objective of making the EU a more attractive place for foreign investors and of boosting the presence and competitive position of EU firms in world markets seems far from being achieved.’

These are quotations from: Fabienne Ilzkovitz, Adriaan Dierx, Viktoria Kovacs and Nuno Sousa, European Economy, Economic Papers, N° 271 January 2007, Steps towards a deeper economic integration: the Internal Market in the 21st century, A contribution to the Single Market Review. European Commission, Directorate-General For Economic and Financial Affairs, ISSN 1725-3187.